Renewable trade wars: green mercantilism and the threat to innovation

Other countries undercutting the US on PV sales complicates a renewable future.

The US renewable energy industry is suffering at the hands of overseas competitors who are refusing to play fair, the Information Technology & Innovation Foundation claims in a new report. By using "unfair" practices, countries including China, India, and Brazil are threatening both the USA's renewable technology sector and the future of renewable energy at large.

Protectionist policies such as import tariffs are just one type of "green mercantilism" described in the report, with IP theft, currency manipulation, export dumping (flooding the export market with discount goods) and forced technology transfer (the handing over of advanced technology to another country in exchange for access to its domestic market) are among other methods employed.

Solar wars

Violating "the spirit or the letter" of WTO law, such policies contributed to the relative collapse of US solar exports, the report's authors argue. "The United States watched its first-generation solar PV export market share fall from 30 percent to 7 percent in under a decade while China's grew from two percent to 55 percent," co-author Matthew Stepp wrote in an email to Ars.
Recent months have seen counter-salvos from the US in what is fast becoming a trade war with China. In May, the Department of Commerce announced a 30-percent minimum tariff on Chinese solar imports in response to a petition by the Coalition for American Solar Manufacturing (CASM) which claimed China had swamped the US market with illegally discounted goods. US PV imports from China decreased 64 percent during April in anticipation of the tariff.

On Tuesday, CASM, which has 210 member companies, warned that importers evading tariffs on Chinese solar cells and panels may be guilty of "conspiracy to commit offense or to defraud the United States," and there are signs that US Customs and Border Protection is preparing to play hardball with infringing importers.

Such combative measures aren't universally welcomed. As far back as December, Jigar Shah of the Coalition for Affordable Solar Energy (CASE) wrote to SolarWorld, a member of CASM, asking the company to withdraw its petition on the grounds that it threatened the $60 billion "pipeline" of planned solar installations. In a strongly worded response, SolarWorld's Gordon Brinser dismissed Shah as a mouthpiece of Chinese solar manufacturers at large.

The threat to innovation

If it's a case of a chasm between CASM and CASE, then the Information Technology & Innovation Foundation stands firmly on CASM's side. The report does acknowledge the merits of the argument that in undercutting US manufacturers, China is effectively subsidizing the US with cheap renewable technology (and therefore the associated services and jobs). This will spur renewable energy proliferation which will in turn lead to lower energy prices. The report argues, however, that this consumer-oriented view is short-termist. The bigger picture is the stifling of innovation which spells a grim long-term prognosis for the entire renewable industry.

The report's logic is that a renewable sector in which low cost is king has little to no incentive to innovate. And further innovation is crucial if renewable technologies are to surpass fossil fuels on a dollar per watt basis. The report cites MIT research into the cost effectiveness of PV, which must achieve a cost of $0.50 per peak watt without subsidies in order to compete with coal–a target requiring "advanced concepts not currently in industry roadmaps," according to the MIT study.

"If the goal is to create a global energy system that is largely carbon free, continual dependence on subsidies, whether domestic and legitimate or foreign and mercantilist, is not the way. Driving innovation is," the report finds.

The implications for "green mercantilism" go well beyond both China and the solar industry, Stepp argues. "Now many countries are increasingly using green mercantilist practices to spur similar rapid growth in wind turbines, biofuels, energy storage, and electric vehicles," he writes, while the report cites examples of wind subsidies in Vietnam, the E-FACE program in Japan, and tax relief for biodiesel producers in Brazil.

Counter-mercantilism?

But are the tariffs imposed by the Department of Commerce (at CASM's behest) a sensible response? Doesn't such counter-mercantilism have the potential to escalate the problem? "The US solar industry (or at least the manufacturers that were party to the petition) were justified to have brought the case because of unfair Chinese policy support of their domestic industry, and tariffs are the proper response in the immediate to level the playing field," Stepp told Ars.

"Tariffs are the proper response in all cases of green mercantilist policies because not only do they hurt U.S. domestic industries, they harm the global communities ability to innovate," he added.

Though Stepp admits counter-tariffs have the potential to escalate matters, aggressive mercantilist responses are the only way to level the field of play. A technological optimist might argue that were the US to focus solely on innovation, its renewable technology could leap ahead of competitors hawking the same old cut-price wares. Ars put this to Stepp.

"In order for the U.S. to out-innovate, it must still prosecute green mercantilist policies. To give an example, China's dominating first generation silicon-based solar PV. But the US has been a leader in second generation thin-film solar technologies and is currently investing significantly in third and fourth generation solar designs that use nanotechnologies. What's to stop China from simply doing what it's doing now in first generation solar to next-generation solar? Why wouldn't they just use practices like forced technology transfer, barriers to market access, etc., to gain a foothold in those advanced industries and unfairly subsidize and export dump their way to market dominance?"

A silver bullet?

But innovation is crucial, Stepp argues. The report characterizes the renewable industry's situation as a choice between an innovation-driven race to the top versus a subsidies-driven race to the bottom. Only the former will permit the global renewable industry meet its potential for growth, projected to be $2.2 trillion in the coming decades.

The authors call for a global adoption of "good" renewable energy policy which will benefit both individual nations and the global renewable industry. Such policy includes education and skills training, fair and competitive trading and research funding–but it's the latter that seems to be key.

International agreement on climate change could provide the impetus needed to put the focus of renewable industries back onto innovation. The report proposes that nations be offered the choice between reducing greenhouse gas emissions or increasing their research into clean energy technology. "Setting even a modest target like 0.065 percent of nation's GDP devoted to clean energy RD&D would increase public investments in innovation by $40 billion annually, assuming most countries agree to the targets," the report asserts.

Such an agreement could follow the model of the Information Technology Agreement (ITA) established in 1996. Though such agreements are not without their complications, the authors argue that a Clean Technology Agreement would eliminate tariffs that would increase the demand for clean energy, while fostering a more harmonious clean energy market.

But without such an agreement in place it would seem that mercantilism begets mercantilism. And while some argue that that may be good for clean energy advancement, the Information Technology & Innovation Foundation strenuously begs to differ.

The full report, entitled Green Mercantilism: Threat to the Clean Energy Economy and co-written by Matthew Stepp and Robert D. Atkinson, is available from the ITIF website.

62 Reader Comments

Buy up all the cheap chinese solar panels and use them to produce electricity, which gets stored in enormous capacitors. Then construct giant "lasers" aimed at China which could release all that stored energy unless they hand back the money originally used to buy all the panels. Mwuh-hah-haaaah!

US uses a "complaint" (whether it has merit or not) to protect it's industry, which is very difficult to overturn - the US has done this more times than I can count in softwood to meat to cotton, when it is finally overturned another complaint comes up. There are mechanisms to use, this one is cheap and should be outlawed in its use.

More excuses, what has happened to the US being the leader in technology?

I'm tired of the whining about money, it's always money.

How about encouraging kids, starting in middle school, to pursue degrees in science and engineering who show the aptitude to succeed in those fields, much like Germany does. I think we have enough liberal art majors out there already.

Also it isn't that easy for countries to innovate or simply copy something if the problem is sufficiently advanced enough.

I don't see China having a competitive airliner or automobile yet to compete with western designs. So it isn't just a matter of reverse engineering.

How about less moaning about how everything is so unfair and actually trying to do something about it.

You guys are being absurd if you don't think that the Chinese are dumping products on the US. The Chinese are subsidizing their production by using OUR research. We spend billions in R&D and they just take it. However I think any business that would agree to a forced technology transfer gets what it deserves. Any Civ player can tell you that you don't trade tech for open borders.

American renewable energy sector is not the only one losing out because of China. I had stocks in REC, a Norwegian solar cell producer. Now most of that money is gone, because they say it is almost impossible to compete with Chinese manufactureres because they sell Solar cells for less than the price of raw material. Similar thing is apparently happening in Denmark. Their windpower industry is getting whiped out by the Chinese.

I am not sure I get this. I mean does it really make economic sense to drive out the competition by selling at great loss? I'd like to see some economist crunch the numbers on the Chinese strategy of undercutting the western companies on price until they are bust. Then they buy those bust companies at a low price and get their advance technology. Now they move up the chain and undercut other companies. When all the competition is dead they jack up the prices and make lots of profit.

If this really made economic sense I would have assumed that other companies did this.

Rather than the evil communists cheating (how else could they do well?) maybe it's the US's fault for not competing.

I hope you aren't suggesting that US companies and Chinese companies are competing on a level playing field?

Are you suggesting that the US should be able to compete against a country with a nearly endless supply or raw materials and cheap labour? Should the US also be able to compete with other counties in banana production?

The fact is some nations have natural advantages in certain industries and there's no such thing as a level playing field. The rest of the world accepts this and imports products from places that can produce them more efficiently, but somehow it gets labelled by the US as unfair or illegal competition.

I am not sure I get this. I mean does it really make economic sense to drive out the competition by selling at great loss? I'd like to see some economist crunch the numbers on the Chinese strategy of undercutting the western companies on price until they are bust. Then they buy those bust companies at a low price and get their advance technology. Now they move up the chain and undercut other companies. When all the competition is dead they jack up the prices and make lots of profit.

If this really made economic sense I would have assumed that other companies did this.

This happens quite often. When Toyota decided it was time to compete in the luxury market, they sold their Lexus brand at a severely lower cost than competing Mercedes and BMW vehicles. Toyota of course never admitted to it, but anyone that looks at their initial vehicle pricing based on region and the relatively quicker increase in price compared to other luxury models makes it seem pretty obvious. Sell low to get in the market, and once you have them hooked you start raising the prices to get your ROI back.

The article does not explain at all what China did illegally or unfairly to subsidize solar cells and PV panels.All I see is that the USA unilaterally has an import tax for these items of over 250%!!!, which I would think is illegal with the WTO. If the only advantage that China has is cheap products and cheap labor, then this is the normal state and the USA cannot penalize China with 250% import duties, because the same applies to every other industrial and commercial sectors.

So what exactly is the 250% import duty in response for? What exact "dumping" and "vailing" is there?How is a 250% import tax legal or possible in WTO context, what WTO rule is China breaking?Why are some Chinese companies authorized to export PV panels with only a 31% import tax but all others are on the 250% rate? This hardly looks fair.

Reading the article, I don't see anything that justifies the 250% tax or that justifies CASM vs. CASE, but it looks like there is more to it.

More excuses, what has happened to the US being the leader in technology?

I'm tired of the whining about money, it's always money.

How about encouraging kids, starting in middle school, to pursue degrees in science and engineering who show the aptitude to succeed in those fields, much like Germany does. I think we have enough liberal art majors out there already.

Also it isn't that easy for countries to innovate or simply copy something if the problem is sufficiently advanced enough.

I don't see China having a competitive airliner or automobile yet to compete with western designs. So it isn't just a matter of reverse engineering.

How about less moaning about how everything is so unfair and actually trying to do something about it.

You can take a horse to water, but you can't force it to drink.

If someone isn't interested in science or engineering they're not going to pursue it. The job market has an excellent way of dealing with this. People who choose to get degrees in fields that we lack people have an easy time finding jobs. People who decide to get liberal arts degrees don't, and then proceed to complain about how they're being screwed by the world.

A big thing that often does not come up is following environmental guidelines. Disposing byproducts, effluent treatment are a big part of the cost here in the US. Manufacturers in China and India simply don't care about those environmental laws, which exist for a very good reason. That, and cheap labor causes these countries to undercut the US on price.

"The United States watched its first-generation solar PV export market share fall from 30 percent to 7 percent in under a decade while China's grew from two percent to 55 percent,"

Rather than the evil communists cheating (how else could they do well?) maybe it's the US's fault for not competing.

So are you willing to work for .50 cents an hour with no benefits?

Aaaaaand we have a winner!

Sure labour is cheaper in the developing world - that's standard. I fail to see why that is particularly exciting in this case.

nitespark wrote:

with no benefits?

Not all jobs come with benefits. However if they get free food lodging that is a pretty big benefit - they certainly have got that at Foxconn for years.

Cheaper labor means you are able to keep the prices for your products lower. Almost all manufacturing jobs within the US have benefits and they don't get paid minimum wage. And do you think they get free food and lodging. Foxconn plants are cities within cities. They pay rent and for everything else.

Eraserhead wrote: Rather than the evil communists cheating (how else could they do well?) maybe it's the US's fault for not competing.

I hope you aren't suggesting that US companies and Chinese companies are competing on a level playing field?

PV panels are a global market. The problem was the US didn't subsidize its PV industry, didn't subsidize homeowners purchasing panels and didn't allow tax deductions for home owners like most of Europe and the Asian markets did. That's what drove up prices here in the US to the point they weren't competitive even for the supposed 20 year life of the panels. The US was paying unrealistic global prices because the Europeans ran the cost up by subsidizing installations through direct cash paybacks for home-owners in their countries.

I watched the retail prices in the US go up 250% in 5 years. When I called to order panels I was told they weren't in stock. The manufacturers were only selling to Chinese based distributors, who in turned told me to order them from their vendors in Germany!

In addition its been shown a number of times by green power enthusiasts and business groups that a lot of the PV panels manufactured in China and sold at ridiculously low prices by Chinese distributors ARE sub-standard and are very unlikely to last 10 years much less 20. I personally have seen 4 panels made by 2 different Chinese companies that have de-laminated from the aluminum back panels because the plastic sheeting and glue used disintegrated in the Houston sun. It only took 4 years.

Eraserhead wrote: Rather than the evil communists cheating (how else could they do well?) maybe it's the US's fault for not competing.

I hope you aren't suggesting that US companies and Chinese companies are competing on a level playing field?

PV panels are a global market. The problem was the US didn't subsidize its PV industry, didn't subsidize homeowners purchasing panels and didn't allow tax deductions for home owners like most of Europe and the Asian markets did. That's what drove up prices here in the US to the point they weren't competitive even for the supposed 20 year life of the panels. The US was paying unrealistic global prices because the Europeans ran the cost up by subsidizing installations through direct cash paybacks for home-owners in their countries.

I watched the retail prices in the US go up 250% in 5 years. When I called to order panels I was told they weren't in stock. The manufacturers were only selling to Chinese based distributors, who in turned told me to order them from their vendors in Germany!

In addition its been shown a number of times by green power enthusiasts and business groups that a lot of the PV panels manufactured in China and sold at ridiculously low prices by Chinese distributors ARE sub-standard and are very unlikely to last 10 years much less 20. I personally have seen 4 panels made by 2 different Chinese companies that have de-laminated from the aluminum back panels because the plastic sheeting and glue used disintegrated in the Houston sun. It only took 4 years.

If I recall direct industry subsidies are a violation in the eyes of the WTO. That is the problem.

Suntech is the world's largest manufacturer of PV panels. It's a Chinese-Australian joint-venture company started and run by a Phd from Australia's University of New South Wales (UNSW), who holds 10 personal patents in Solar Innovation. The UNSW is a world leader in solar research and innovation. The latest research done at UNSW is implemented and manufactured by Suntek in China.

I'm an Australian and live in Australia. Late last year we installed 4.4 KW of 2nd generation PV panels from Suntech (courtesy of UNSW world-leading innovation), which outperform anything else on the market.

They certainly weren't cheap, more expensive in fact that most other panels (from Japan and Europe), but that's because they're cutting-edge innovation and relatively speaking, incredibly efficient.

It seems the US Department of Commerce and the CASM is fighting stereotypical straw-men when they lump all Chinese solar manufactures together under a red banner of deceptive and anti-innovational practices. It's simply either a lie, or fundamental ignorance in one's area of expertise, being used to frame international policy.

The other part of the argument is also false: that Protectionism will ensure innovation.

Are you suggesting that the US should be able to compete against a country with a nearly endless supply or raw materials and cheap labour? Should the US also be able to compete with other counties in banana production?

The fact is some nations have natural advantages in certain industries and there's no such thing as a level playing field. The rest of the world accepts this and imports products from places that can produce them more efficiently, but somehow it gets labelled by the US as unfair or illegal competition.

So your definition of efficiency is factories that treat their employees like slaves and can destroy the environment with impunity? If you aren't already in the US, you should move here because the Tea Party needs more voters.

Put up or shut up...prove something. Can just bandy around words and common wisdoms and expect to feel better about wrong things you do. Give it to the WTO, they are standing by...waiting for you. To go this route shows you have no substance.

Suntech is the world's largest manufacturer of PV panels. It's a Chinese-Australian joint-venture company started and run by a Phd from Australia's University of New South Wales (UNSW), who holds 10 personal patents in Solar Innovation. The UNSW is a world leader in solar research and innovation. The latest research done at UNSW is implemented and manufactured by Suntek in China.

I'm an Australian and live in Australia. Late last year we installed 4.4 KW of 2nd generation PV panels from Suntech (courtesy of UNSW world-leading innovation), which outperform anything else on the market.

They certainly weren't cheap, more expensive in fact that most other panels (from Japan and Europe), but that's because they're cutting-edge innovation and relatively speaking, incredibly efficient.

It seems the US Department of Commerce and the CASM is fighting stereotypical straw-men when they lump all Chinese solar manufactures together under a red banner of deceptive and anti-innovational practices. It's simply either a lie, or fundamental ignorance in one's area of expertise, being used to frame international policy.

The other part of the argument is also false: that Protectionism will ensure innovation.

Why am I not surprised?

Once again i state, call me when china removes their own barriers to non chinese companies wanting to do business in the chinese domestic market. Otherwise i hear your boss at Suntech telling you to get off the internet and get back to work.

Are you suggesting that the US should be able to compete against a country with a nearly endless supply or raw materials and cheap labour? Should the US also be able to compete with other counties in banana production?

The fact is some nations have natural advantages in certain industries and there's no such thing as a level playing field. The rest of the world accepts this and imports products from places that can produce them more efficiently, but somehow it gets labelled by the US as unfair or illegal competition.

So your definition of efficiency is factories that treat their employees like slaves and can destroy the environment with impunity? If you aren't already in the US, you should move here because the Tea Party needs more voters.

If you're speaking in reference to making a product, then yes, getting the most productivity for the least cost is more efficient. This story is about a trade dispute, not an issue of poor treatment of workers. If the Department of Commerce wants to go to the WTO and claim China is illegal discounting goods, they need a better argument than 'they can make stuff cheaper than we can and it's not fair!'

If you're outraged over way the Chinese factory workers are treated, that's outside the context of the trade dispute being discussed here, but I don't see any moral high ground in the US either. The complaint by CASM was that they couldn't compete and it was threatening US industry, with no mention made of Chinese workers' rights or environmental issues. And if the US public cared in the least about those issues, they would have chosen to buy the more expensive 'Made in the USA' panels. Outside of some Apple/Foxconn attempts at avoiding embarrassment because of poor working conditions in the Chinese factories, the US public seems quite happy to ignore the whole issue if it saves them a few dollars.

I'll be honest. I'm not terribly concerned about Chinese factory workers. I'm willing to bet they don't give a &^*# about me either.

I just think it's time for people to stop pretending that it's a GOOD thing that jobs are going overseas because factories in China are more "efficient." The whole "we need to send jobs overseas because otherwise companies would go out of business and people would lose their jobs" is a lie and not even a very good one.

The article's premise, based on Stepp's and CASM's flawed 19th-century thinking, is--in a word--bullshit. Anyone with a familiarity with modern economics, and especially with the work of Nobel Prize winning economist Milton Friedman, would cringe at this shortsighted protectionist garbage. I guess that's what you get when you rely on reports authored not by actual economists, but by "progressive" political hacks with degrees in "Science, Technology, and Public Policy" and "City and Regional Planning."

Matthew Stepp and Robert D. Atkinson wrote:

Some argue that America should not only turn a blind eye to such policies, but even embrace them because they lower the price of clean energy imports for the United States, helping both American consumers and the fight against climate change.

Yes, we call them "economists."

Quote:

But the long-term harm of these policies greatly outweighs the short-term benefits. Not only do green mercantilist policies hurt clean energy producers in the United States, they also limit the incentive to invest in innovative, next-generation clean energy technologies, which hurts, not helps, the global community’s ability to reduce the emission of greenhouse gases.

No; your primary mistake is being shortsighted, and your secondary mistake is ignorance of economic history. If the market is currently flooded with cheap "current-generation" subsidized Chinese clean energy equipment, and this has the effect of delaying investment in "next-generation" clean energy technology by American companies, this is not a bad thing and will not result in an overall delay in development of next-generation clean energy technology. Why not? There are many reasons, but among them are:

1) Clean energy installations will increase dramatically due to the cheap Chinese equipment, resulting in economies of scale and scope and much larger markets for clean energy equipment and upgrades in a much shortened timeframe. Without cheap Chinese equipment, markets will remain small and niche--and so revenue and investment will remain small and niche.2) Because of this dramatically larger/faster market growth and penetration, even if "next-generation" products are delayed because of delayed/lowered investment in the short term, their uptake when they are developed will be dramatically faster. It's no secret that those companies which start or grow a market early on often pave the way for competitors with better technology or products to swoop in and dominate. Let the cheap Chinese products be the first wave soldiers taking Omaha Beach--creating the large, commodity market; it's smaller research groups who'll develop the technology and own the patents for the future waves which will eventually dominate the countryside.3) Because those who develop the technology and own the patents for "next-generation" technology will dominate the market in future, and all market players know this, such investment will never really wane very much for very long.4) When the market is saturated with this cheap Chinese equipment and installed base approaches maximum, do you expect those manufacturers to give up and leave the market, or to stop innovating? Of course not; manufacturers never say "Well, everyone has a [car, computer, whatever widget] now, time to move on!" or "Well, everyone's happy with their [widget], we'll just make them exactly like this forever and hope no one will ever come along with a better [widget]." Well, a few have said that, and they got pummeled by new competitors. Do we really think overall innovation is going to be significantly retarded? The bulk of economic history proves otherwise.

No no; what this is really about is a few American manufacturers and investors wanting protectionism--to the detriment of the consumer, to the detriment of the growth of the clean energy market, and to the detriment of the advancement of next-generation technology.

Of course, Stepp and Atkinson admit that economists disagree with them:

Quote:

As a result, many U.S. neo-classical economists, and the policymakers that subscribe to their views—who are largely concerned only with short-term consumer welfare—argue that if these other nations are misinformed enough to subsidize American consumers with cheaper clean energy products we should sit back and reap the benefits. Likewise, many in the non-traded portion of the clean energy industry (e.g., solar panel installers) agree, arguing that subsidized products lead to expanded demand for their services and the jobs related to that. Finally, enamored by the short-term benefit of artificially lower clean energy prices (e.g., a few more solar panels installed in the United States), some clean energy advocates turn a blind eye toward or even welcome green mercantilist policies, especially those designed to directly or indirectly subsidize exports. From their perspective, putting a tariff on clean energy imports equal to the amount of unfair foreign subsidies simply increases prices and reduces clean energy deployment. For them mercantilist, cost-reducing policies are no different in benefit than subsidizing consumer purchases of clean energy. Both make clean energy cheaper and expand domestic demand; therefore any attempt to scale back green mercantilism is seen as akin to cutting domestic clean energy incentives and subsidies.

But they characterize such views as "short-term" when it's their own which are truly focused on the short-term, since their only concern and argument seems to be that cheap Chinese equipment will somehow disincentivize American "clean energy innovation" and the development of the "next-generation" technology they're focused on by American companies. But where's their evidence that any of the American companies whose products were undercut were really working on the successful "next-generation" technology of the future, and not on dead ends? Where's their evidence that buying all this cheap Chinese equipment won't spur the development of successful next-gen tech in China which American firms like Solyndra could never have managed? Where's their evidence that the successful next-gen tech won't be developed in American laboratories and patented by American institutions, and licensed to firms from any and all countries who can make successful products? Where's their evidence that the much greater overall market for clean energy created by cheap Chinese equipment won't spur even greater investment, faster, which will result in successful next-gen developments sooner than they would have occurred otherwise? They have no such evidence, only ideology and assumptions:

Quote:

Moreover, by reducing the economic advantages to fair-playing nations from clean energy innovation investments, green mercantilism erodes the political will to support clean energy innovation policies. We have seen that clearly in the United States, where the willingness to invest in clean energy innovation has waned significantly over the last few years in the midst of many high profile bankruptcies (e.g., Solyndra, Evergreen Solar, and Konarka) which in part were due to Chinese mercantilist practices

Since such companies were accepting significant subsidies from our own government, their argument essentially boils down to "some subsidies are good and other subsidies are bad"--based on non-economic reasoning. Complete fail. But here they finally betray their true, ideological, political motivation:

Quote:

Why invest public dollars if mercantilist nations like China will get the lion’s share of the jobs?

More excuses, what has happened to the US being the leader in technology?

I'm tired of the whining about money, it's always money.

How about encouraging kids, starting in middle school, to pursue degrees in science and engineering who show the aptitude to succeed in those fields, much like Germany does. I think we have enough liberal art majors out there already.

If you're talking about the supposed shortage of American STEM workers, it's also bull--a complete myth promulgated by corporate management so that they can flood the labor market to artificially depress STEM wages, institute unrealistically high job requirements, and avoid having to invest in in-house training; and by education institutions which benefit from greater foreign enrollment. This three-part article is a good introduction to the real situation:

It's trivial to support the case that the STEM worker shortage is a myth:

If there's a shortage of STEM workers, why have STEM salaries been flat for over a decade--tech boom and bust, great economy and crappy economy? Is that really how laws of supply and demand work when there's a shortage? No, that's what happens when you have an overabundance of workers: wages flatten or fall, regardless of industry or economic developments.

If there's a shortage of STEM workers, why do less than 1/3 of STEM workers receive in-house training or professional development benefits each year? Wouldn't companies be rushing to train their employees to meet shortages? Instead companies refuse to hire anyone who isn't already employed by someone else, or doesn't already have extensive experience or fresh training.

If there's a shortage of STEM workers, why do 50+% of students pursuing STEM degrees enter non-STEM jobs? That's what happens when there's a labor glut with depressed wages and strict hiring requirements, not when there's a labor shortage.

If there's a shortage of STEM workers, why does the U.S. have twice the number of STEM personnel unemployed as it actually has working in STEM jobs?

The article's premise, based on Stepp's and CASM's flawed 19th-century thinking, is--in a word--bullshit. Anyone with a familiarity with modern economics, and especially with the work of Nobel Prize winning economist Milton Friedman, would cringe at this shortsighted protectionist garbage.

You lost me there. Friedman may have been brilliant, but in the end became a political animal preaching dogma despite growing evidence that free markets have big downsides. Laissez-faire capitalism has helped only the richest in the developed world. The rest of us have seen our incomes stagnate or drop even while our productivity increases. I'll take another Nobel Prize winning economist like Paul Krugman thank you very much.

It is not that the regulators did not see this coming!. It was all planned to stall the wide-spread use of solar panels so that the oil cartels can milk every last drop of their oil reserves.

Also, due to the absurdly low wages in China, no other country can really compete with it in terms of price. They can pull raw materials from the earth way cheaper than anybody can. So if the rest of the world is going to just sit there because they are not competitive enough to check to see what government and the WTO, UN is doing to improve the situation rather than sit on it and say "nothing we could do!".

There is such thing as innovation and protecting your IP. Look at Corning with Gorilla glass. They have just ONE factory in the USA doing all the sheets for all the smartphones and tablets out there and China just CANNOT seem to copy this as yet!. So how did Corning do it ?. There is a secret there worth understanding!.

If it's a case of a chasm between CASM and CASE, then the Information Technology & Innovation Foundation stands firmly on CASM's side. The report does acknowledge the merits of the argument that in undercutting US manufacturers, China is effectively subsidizing the US with cheap renewable technology (and therefore the associated services and jobs). This will spur renewable energy proliferation which will in turn lead to lower energy prices. The report argues, however, that this consumer-oriented view is short-termist. The bigger picture is the stifling of innovation which spells a grim long-term prognosis for the entire renewable industry.I hope China will play a bigger role.As this article said www.hatsgoing.com

The article's premise, based on Stepp's and CASM's flawed 19th-century thinking, is--in a word--bullshit. Anyone with a familiarity with modern economics, and especially with the work of Nobel Prize winning economist Milton Friedman, would cringe at this shortsighted protectionist garbage.

You lost me there. Friedman may have been brilliant, but in the end became a political animal preaching dogma despite growing evidence that free markets have big downsides. Laissez-faire capitalism has helped only the richest in the developed world. The rest of us have seen our incomes stagnate or drop even while our productivity increases. I'll take another Nobel Prize winning economist like Paul Krugman thank you very much.

Friedman's only deficiency may have been in not expressing clearly enough that the "free market capitalism" he advocated, as he advocated it, is distinct from pure "laissez-faire capitalism" in that government intervention and regulation is not only acceptable but necessary to preserve free markets in some circumstances, and to avert economic disaster in a few. The most prominent example of Friedman supporting interventionism is when he suggested that allowing the Bank of the United States to fail provided the critical mass for the Great Depression, and that since the other banks were unwilling to step in to prevent this that government should have done so. In that respect, Friedman wasn't an absolutist and differs in that respect from many of the naive absolutist-free-marketeers one finds among contemporary commentators and from many of the predatory absolutist-free-marketeers one finds among current corporate leaders.

But other than preserving market freedom and averting economic disasters, there's little evidence that government interventionism is warranted or that free markets have "big downsides." Indeed, we owe most of the modern world to capitalism and free markets, all the way back to the early joint-stock companies which paid to send Europeans across the world to populate it both literally and with new ideas and opportunities. Far from helping "only the richest in the developed world," capitalism has created the developed world, and the periods when markets were most free were periods of great expansion and innovation without which we wouldn't be as technologically and culturally advanced as we are today.

You speak of one specific problem: "The rest of us [other than the rich] have seen our incomes stagnate or drop even while our productivity increases." Real-world inflation-adjusted median incomes have indeed fallen steadily since the 1970s, and this is a problem. But there are some points to consider...

First and foremost, a significant portion of the income anomaly is due to the increase in the supply of labor. Harvard economist George Borjas has demonstrated conclusively that for every 10% increase in the number of workers in a given sector, wages fall by ~3%-4%. Immigration has been a major source of increased labor supply in the U.S., and in some sectors--particularly those dominated or formerly so by low-skilled natives--they've driven wages down by more than 20% during the period of national median income decline. Immigration also affects housing prices, local ecology, traffic, government expenditures, native racism, social cohesion, and culture--but I digress; its effects on wages are what's relevant here, and they're demonstrable. However, less often taken into account is that the labor supply has also increased markedly over the period of median income decline due to the increased percentage of women joining the workforce; I have yet to find an economic analysis of this component's effect on wages since the 1970s, but I'm willing to bet it's been a significant factor in driving down median income. So, it's not so much a case of "rich people have been getting richer at the expense of the working classes" as "the working classes have been competing against themselves more (through immigration and women's financial independence), causing median incomes to fall."

Of course, while many working class Americans would argue to end immigration, few would argue to end women's financial independence. That's been a wonderful and necessary development over the last half-century; but its effect on median incomes has been palpable--doubly so since women are often paid less than men in equivalent positions. This is a case where one could reasonably argue for government interventionism, in making it illegal to have such wage disparities between genders and having a toothsome method of enforcement (though hopefully with a sunset provision, so the law can expire after a period of success). But in any event, the story here is one of social progress having an economic cost, not one of the greed of the rich. Moving on...

Quality of life and lifestyle measures have actually increased. Was the average working-class American really better off in 1970, before the decline in real-world inflation-adjusted median incomes? No. The "less income" we're stuck with actually buys "more stuff" in many instances today, and there's greater "consumption equality" today than in previous decades.

Another consideration is mobility. While there's notable income inequality in the U.S., there's also notable absolute mobility and intragenerational mobility between income quintiles. Quoting Thomas Sowell, "An absolute majority of the people who were in the bottom 20 percent [of income] in 1975 have also been in the top 20 percent at some time since then. Most Americans don't stay put in any income bracket. At different times, they are both 'rich' and 'poor' -- as these terms are recklessly thrown around in the media.... There are of course some people who remain permanently in the bottom 20 percent. But such people constitute less than one percent of the American population, according to data published by the Federal Reserve Bank of Dallas in its 1995 annual report. Perhaps the intelligentsia and the politicians have been too busy waxing indignant to be bothered by anything so mundane as facts."

Additionally, the numbers themselves regarding incomes can be misleading. Most U.S. data refer to "households" and divide into quintiles of households rather than of equal numbers of people. Adjusting the data into quintiles of equal population sizes is instructive, as is including government wealth-transfer payments:

Finally, the impact of globalization cannot be overstated. Whatever we think of its consequences, it's a fact of life and has contributed greatly to the rise in income inequality over the past several decades--and there's really little to be done about it. Not only have workers in the lower economic tiers been affected, but a largely new tier of elites has been created and has quickly accumulated wealth as a result of globalization--Robert Reich calls these people "global symbolic analysts."

The rise of this new class of elites at the top, together with the labor supply glut at the bottom, is at the heart of the increased post-1970 income inequality.

But, if you want to minimize the income inequality, that can certainly be done with policy changes which work within the current capitalist system--and would work equally well in an even more free-market system. Simply increasing taxes on investment income to match those on earned income, imposing estate taxes, etc., would achieve these policy goals if one considers them desirable. Capitalism and free markets work better than any other economic system. Their results may need to be tweaked through political and social policy, of course; but that is secondary.

The real problem slowing down innovation in renewable energy is the subsidising of the oil industry.

And then people claim that the US prefers a free market.

Most of the "subsidies" people complain about regarding the oil industry are related to projected future environmental impacts; as such, they aren't "subsidies" in the strictest sense, but only according to a deliberately tortured and stretched definition.

There are some actual subsidies, however, for the fossil fuels industry--and I'd certainly be in favor of eliminating them, and all such subsidies (including those for renewable energy, for agriculture, etc). Subsidies and market distortions are almost always bad and cause more harm than good. The more free the market, the more efficient the market, and the greater the innovation and responsiveness.

Suntech is the world's largest manufacturer of PV panels. It's a Chinese-Australian joint-venture company started and run by a Phd from Australia's University of New South Wales (UNSW), who holds 10 personal patents in Solar Innovation. The UNSW is a world leader in solar research and innovation. The latest research done at UNSW is implemented and manufactured by Suntek in China.

I'm an Australian and live in Australia. Late last year we installed 4.4 KW of 2nd generation PV panels from Suntech (courtesy of UNSW world-leading innovation), which outperform anything else on the market.

They certainly weren't cheap, more expensive in fact that most other panels (from Japan and Europe), but that's because they're cutting-edge innovation and relatively speaking, incredibly efficient.

It seems the US Department of Commerce and the CASM is fighting stereotypical straw-men when they lump all Chinese solar manufactures together under a red banner of deceptive and anti-innovational practices. It's simply either a lie, or fundamental ignorance in one's area of expertise, being used to frame international policy.

The other part of the argument is also false: that Protectionism will ensure innovation.

Why am I not surprised?

Sorry to burst your bubble, but there is nothing innovative in monocrystaline PV-cells. It is a low tech mass product that has been mastered at least 20 years ago.The "only" innovation in that field is in minute optimising production processes for marginally lower cost. Something that the Chinese are very good at. Due to low labour costs, next to non-existant environmental protection and indirect governement subsidies (not that much really, but it is the final straw), it is impossible for European/US manufacturers to compete against the same "technology".

Additionally, China holds a monopoly on Indium, an irreplaceable and essential component of the transparent conductor of every PV-cell.

Only truely innovative products such as thin-film PV or CdTe can theoretically compete against the Chinese might. And even here, all significant technological gains have been achieved. It won't get any better in the future.

A big thing that often does not come up is following environmental guidelines. Disposing byproducts, effluent treatment are a big part of the cost here in the US. Manufacturers in China and India simply don't care about those environmental laws, which exist for a very good reason. That, and cheap labor causes these countries to undercut the US on price.

And not to mention poison the environment, and how well all collectively pay the price for these externalities...